NFTs have entered the chat.

Prime Future 96: the newsletter for innovators in livestock, meat, and dairy

"Buy land. They aren't making any more of it."

It seems like every farm kid across the entire face of God's green earth grew up hearing some variation on this idea. Farmland has historically appreciated ~12% annually.

While farmland has been a reliable investment class over time, many would say that’s true of the broader real estate market.

So this tweet caught my eye:

If you've never felt older than after reading that tweet, you are not alone.

What non-physical things are ‘young crypto investors’ investing in? The obvious is cryptocurrencies, but there are also DAOs (which we’ve briefly touched on) and NFTs.

"A non-fungible token (NFT) is a non-interchangeable unit of data stored on a blockchain, a form of digital ledger, that can be sold and traded. Types of NFT data units may be associated with digital files such as photos, videos, and audio. Because each token is uniquely identifiable, NFTs differ from most cryptocurrencies, such as Bitcoin, which are fungible.

NFT ledgers claim to provide a public certificate of authenticity or proof of ownership, but the legal rights conveyed by an NFT can be uncertain. NFTs do not restrict the sharing or copying of the underlying digital files, do not necessarily convey the copyright of the digital files, and do not prevent the creation of NFTs with identical associated files."

Think of it this way - while land is tangible and scarce, NFTs are intangible and not necessarily scarce.

Let's say you mint an NFT for a photo of your neighbor's tractor. Does that mean you own your neighbor's tractor? Nope.

Let’s say you mint an NFT for someone else's tweet, does that mean no one else can view or retweet that tweet? Nope. It just means you own an NFT. 🤷🏻‍♀️

The characteristics of NFTs are the exact opposite of the characteristics of land, which are the reasons many investors love land.

And yet Opensea, the largest platform for buying & selling NFTs, facilitated $14 billion in NFT trading in 2021. Maybe this was a pandemic/stimulus induced fluke, though the NFT bulls will tell you there are two types of NFTs:

1. Collectibles like art, or a tweet you like, or your 5 year old's drawing

2. Utility.

But dear reader, I have tried and failed to understand the potential utility of an NFT.

Take the new NFT being launched by the hosts of The Modern Acre podcast. Here's the pitch:

As someone who is skeptical but curious, I thought this might be a fun way to learn more about NFTs.

Then the pricing information came out. One NFT to join Modern Acre's Co-op is priced at .3 ETH.

To put that .3 ETH into context, here’s how this works:

When you buy an NFT, you do not pay for it in dollars - you pay for it in ethereum, the second most traded cryptocurrency with a market cap of $347B. So you put dollars into a crypto account to buy ethereum (ETH) then use ETH to buy your NFT. When you're buying a newly created NFT, it's called minting. Oh and anytime you do a transaction with ETH, you'll get charged what is effectively a transaction fee, called a 'gas fee'. The kicker is that you don't know precisely how much that fee will be until after the fact, could be $50 or could be $250+. Cool.

As of this writing, one ETH is trading at $3,037.

So minting an NFT at .3 ETH is $911, plus gas fees.

First let me say that I truly tip my hat to the Nuss brothers for running this experiment & pioneering what seems to be the first ag related NFT.

But as far as I can tell, the benefits of minting an NFT to join the Modern Acre co-op are (1) a heaping dose of novelty and (2) access to a group chat.

Granted it's likely a group chat with other curious minded ag folks but $911+ in order to <checks notes> join a group chat? That's a pass from me, at least for now. Especially since there are a million different ways to find & connect with like minded humans.

That decision brings us back to the same questions I ask about blockchain, and DAO's, and now NFTs:

• What is the value proposition?

• What is the ROI?

• What is the use case where the technology solves an Actual Problem or creates a real opportunity?

While I trust the Modern Acre guys will prove my skepticism wrong in spectacular fashion over time, my general word cloud around NFTs today is: unclear, scammy, bubbly, huh.

I'm skeptical if there is a ‘there there’ with NFTs, but I grew up with "they aren't making more land" mentality. I'm also operating with the awareness that potentially (1) NFT bulls know something I don't know, and/or (2) there could be a use case for NFTs that becomes evident, eventually.

Back to the juxtaposition in that tweet about young crypto investor mentality vs older real estate investor mentality, it makes you wonder if it is a generational difference in technology understanding or if it is simply a reflection of markets today.

Does the next generation not invest in real estate because they know something about digital investing that real estate investors do not?

Or do they invest in digital investments because that's the cool thing to do right now and/or because they've been priced out of real estate markets?

Alternatively, perhaps those framing NFTs as an emerging investment class have the wrong framing entirely. The speculative nature of collectible NFT’s are good old fashioned speculation. And if the utility of token-gated communities is access to a glorified group chat of people with a shared interest, then that’s an investment in the sense that getting a degree is an investment. That’s a learning & network investment, not a financial one.

There's a gaggle of interesting startups innovating around buying, selling & renting farmland: Farmland Finder, Acre Trader, & Tillable, just to name a few. If digital investing really is introducing a paradigm shift, then will we see a gaggle of startups innovating around NFTs within ag? What would that look like? What would drive it? What value could it create?

Your turn:

• What is your impression of NFTs?

• Once the novelty wears off, what value could they add to agriculture?

• What kind of utility would compel you to purchase an NFT?

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Related content from the archives:

Blockchain: all dressed up but where to go? 😕

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